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Chapter 08 - Marketing Research: From Customer Insights to Actions
8-21
* Without being forced to select from among those that a marketing
researcher has predetermined
– Is useful in:
* Understanding consumer behavior.
• Q2: Dichotomous question.
– Is the simplest form of a fixed alternative question.
– Has only a “yes” or “no” response.
• Q3: Closed-end or fixed alternative question.
– Requires respondents to select one or more response options…
– From a set of predetermined choices.
• Scale question.
– Is a fixed alternative question with three or more choices.
– Consists of the following types:
* Q5: Semantic differential scale.
◊ Is a five-point scale in which…
◊ The opposite ends have one- or two-word adjectives that have
opposite meanings.
* Q6: Likert scale.
• Q1 to Q8. These questions inform the marketing researcher about the
respondents’:
– Likes and dislikes in eating out.
• Q9: Demographic questions.
– Provide details about the respondents’ personal or household
characteristics.
– May be used to segment the market.
g. Typical problems to guard against in wording questions:
• It is essential that questions be worded precisely so that:
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– All respondents interpret the same question similarly.
– Marketing actions developed are consistent with the findings based on
the data.
h. Mall intercept interviews.
• Consists of personal interviews of consumers visiting shopping centers.
• Advantages and disadvantages:
– Reduces the cost of personal visits to consumers in their homes.
i. Electronic technology has revolutionized traditional concepts of interviews
and surveys:
• Kiosks in shopping malls. On a touch screen:
– Respondents read questions.
– Key in their answers.
• Automated telephone interviews.
– An automated voice asks questions.
– Respondents key replies on a touch-tone telephone.
[ICA 8-3: Designing a Taste Test Survey for Howlin’ Coyote Chili]
F. Primary Data: Other Sources
There are four other methods of collecting primary data exist that overlap somewhat
with observational or questionnaire methods.
1. Social Media.
a. Facebook, Twitter, and other social media:
• Are changing the way marketing research is done.
b. Carma Laboratories Inc., maker of Carmex lip balm, has a history of
accessibility to customers.
• Founder Alfred Woelbing personally responded to every customer letter.
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• Today, Carma Labs uses social media programs to help promote its
products.
– Can conduct marketing research using social media listening tools
to…
– Understand the nature of online lip balm conversations.
c. Carmex uses these marketing metrics to assess its social media programs for
its line of products:
• Conversation velocity. Total Carmex mentions on the Internet.
• Share of voice. Total Carmex mentions on the Internet as a percentage of
all major lip balm brands.
d. These metrics are tracked by search engines that comb the Internet for
consumers’ behaviors and brand mentions.
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APPLYING MARKETING METRICS
Are the Carmex Social Media Programs Working Well?
You are a marketing consultant to Carmex, asked to assess its social media activities
for its lip balm product line. Carmex has recently launched new social media programs and
promotions, including:
• Facebook and Twitter contests to allow Carmex likers and followers to win free
samples by connecting with Carmex.
• A “Carmex Kiss” widget allows users to upload their photo and to send an animated
kiss to a friend.
a. Your Challenge. To assess how the Carmex social media programs are doing, you
use five metrics:
• Carmex conversation velocity—total mentions on the Internet.
• Facebook likers—the number of Facebook users in a time period who have liked
Carmex’s Facebook brand page.
b. Your Findings. Analyzing the marketing dashboards, you reach these conclusions:
• The number of both Facebook likers and Twitter followers is up significantly for
2017 compared to 2016.
• The Carmex share of voice of 35 percent is good compared to the top brand, and
is up 12 percent since last year.
• The Carmex sentiment dashboard shows:
c. Your Actions.
• You conclude that Carmex’s social media initiatives are doing well.
• The next step is to identify which initiatives are doing particularly well, and
build on these successes.
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2. Panels and Experiments.
a. A panel is a sample of consumers or stores from which researchers take a
series of measurements to see if consumers change their behavior over time.
• The NPD Group collects data about consumer purchases such as apparel,
food, and electronics from its online Consumer Panel, which consists of
nearly 2 million individuals globally.
• An advantage of panels is that it measures switching behavior from one
brand to another over time.
• A disadvantage of panels is that:
b. An experiment involves obtaining data by manipulating factors under tightly
controlled conditions to test cause and effect.
• The interest is in whether changing one of the independent variables
(a cause) will change the behavior of the dependent variable that is studied
(the result).
• In marketing experiments:
– The independent variables are:
* Sometimes called the marketing or sales drivers.
* Often one or more of the marketing mix elements:
– The dependent variable is:
* Usually a change in purchase behavior (incremental increases in
unit or dollar sales)…
* Of individuals, households, or organizations.
– Test markets:
* Are experiments that…
• A disadvantage of experiments:
– Outside factors (such as actions of competitors)…
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c. Researchers must identify the effect of the marketing variable on the
dependent variable when outside factors in an experiment might hide it.
[ICA 8-4: Pepsi vs. Coke Taste Test]
3. Big Data, Data Analytics, and Artificial Intelligence
a. Big data is a vague term used to describe large amounts of data collected from
a variety of sources and analyzed with an increasingly sophisticated set of
technologies.
b. Information technology includes all the computing resources that collect,
store, and analyze data.
c. Challenge is how to transform the huge amount of data into useful
information. This is done through the use of data analytics and data
visualization—the presentation of results analysis.
d. Data can be obtained from many sources:
e. [Figure 8-5] Marketing managers:
• Use information technology, data, models, and queries to obtain results
that lead to marketing actions.
• Organizations that accomplish this are referred to as intelligent
enterprises.
f. Figure 8-5 shows how marketers use information technology to frame
questions that provide answers leading to marketing actions:
• Computers:
– Are linked through sophisticated communication networks to…
– Access and retrieve data from internal and external sources.
• These data sources:
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– Determine how a hypothetical change in a driver can affect sales.
g. Traditional marketing research involves identifying possible
marketing/sales/brand drivers and then collecting data about them.
• Drivers are the factors that influence the buying decisions of a household
or organization and, hence, affect sales.
4. Data Mining.
a. Is the extraction of hidden predictive information from large databases to find
statistical links between consumer purchasing patterns and marketing actions.
b. Example: Running a joint promotion between Skippy Peanut Butter and
Welch’s Grape Jelly since both tend to be purchased together for sandwiches.
c. Some unexpected pairings arise from data mining:
• Example: Men buying diapers often also buy beer.
MAKING RESPONSIBLE DECISIONS
Ethics: No More Personal Secrets: The Downside of Data Mining
Amazon, Google, Yahoo!, eBay, YouTube, Facebook, Twitter, and others engage in
sophisticated data mining of the Internet and social media sites that reveal an incredible
amount of personal information about any American (Social Security number, product
purchases, interests, websites browsed, etc.).
These data are collected from the Internet using cookies and other apps downloaded
on to a mobile phone, PC, or tablet device to reveal a user’s contact list and location. This
data mining enables marketers to create one-to-one personalization profiles, consisting of
consumers’ demographics such as age and sex as well as their “likes,” past buying habits,
social media used, brands bought, TV programs watched, and so on to target them with ads
and offers regarding their offerings.
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G. Advantages and Disadvantages of Primary Data
• Advantages of primary data:
a. Are more timely.
b. Are more specific to the problem being studied.
• Disadvantages of primary data:
H. Analyzing Primary Data Using Cross Tabulations
• Wendy’s developed a questionnaire to survey a sample of respondents to obtain
information that will allow it to understand its target market for its fast food.
• The questionnaire in Figure 8-4, in part, attempts to assess how often customers
of different ages eat at fast-food restaurants.
1. Developing Cross Tabulations.
a. A cross tabulation, or cross tab, is a method of presenting and analyzing data
involving two or more variables to discover relationships in the data.
b. The Wendy’s questionnaire in Figure 8-4 includes many questions that might
be paired to understand the fast-food business better.
c. Example: Wendy’s management suspects that as the age of the head of the
household increases, visits to fast-food restaurants decline.
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d. [Figure 8-6] The cross tabulation shown in Figure 8-6 is as follows:
• The column headings are the answers to Figure 8-4—Question 3:
How often do you eat at a fast-food restaurant?
• The row headings are the answers to Figure 8-4—Question 9d:
What is your age?
e. [Figure 8-6A] Shows the raw data, answers, or absolute frequencies to the
two questions.
• 144 head of household respondents who were under 25 (shaded red) ate at
fast-food restaurants once a week or more.
• The loyalty of fast-food customers is shown as follows:
– Those visiting a fast-food restaurant once a week or more (272) were
f. [Figure 8-6B] Shows the answers, on a percentage basis, with the percentages
running horizontally to the two questions.
• Of the 215 head of household respondents who were under 25:
– 67.0 percent ate at a fast-food restaurant at least once a week.
g. Two other cross tabulations using the data shown in Figure 8-6A are described
in Applying Marketing Knowledge problem 7 at the end of the chapter.
2. Interpreting Cross Tabulations.
a. Figures 8-6A and 8-6B show that patronage of fast-food restaurants is related
to the age of the head of the household.
b. The percentages on the diagonal (in blue) in Figure 8-6B reveal that younger
households are far more likely than older ones to visit fast-food restaurants
once a week or more.
c. Therefore, to reach frequent users of fast-food restaurants, we should target
those whose head of household is under 25 years of age.
• Figure 8-6B shows that 67.0 percent of these young households visit these
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d. Wendy’s might advertise to the segment of households headed by a man or
woman under 25 years old.
e. Figures 8-6A and 8-6B do not tell us what media to use to reach them—such
as using television ads or social networks.
f. Need to relate the age of the head of household to Question 7 in Figure 8-4—
which source(s) of information do these heads of households use.
g. Advantages of cross tabulations.
• Is a widely used technique for organizing and presenting marketing data.
• Has a simple format that permits direct interpretation and an easy means
h. Disadvantages of cross tabulations.
• Can be misleading if the percentages are based on too few observations.
• Can hide some relationships because each cross tab typically shows only
two or three variables.
i. More marketing decisions are probably made using cross tabulations than any
other method of analyzing data.
LEARNING REVIEW
8-6. What is the difference between observational data and questionnaire data?
8-7. Which type of survey provides the greatest flexibility for asking probing
questions: mail, telephone, or personal interview?
8-8. What is a cross tabulation?
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V. STEP 4: DEVELOP FINDINGS [LO 8-5]
Mark Twain once observed, “Collecting data is like collecting garbage. You’ve got to
know what you’re going to do with the stuff before you collect it.”
A. Analyze the Data
• Marketers are presented with a set of marketing problems to resolve, such as:
a. “How are sales doing and what factors might be contributing to sales?”
b. “Who are our customers and what actions can we do to reach them?”
c. “What factors contribute to the level of sales experienced over a time period?”
• Once the answers or data are identified and analyzed, marketers can then develop
actions for their marketing plans and implement them.
B. Present the Findings
• [Figure 8-7] Findings should be clear and understandable from the way the data
are presented. Managers are responsible for actions.
• The results should be delivered in:
a. Clear pictures (i.e., graphically).
b. If possible, on a single page.
a. Figure 8-7A: Annual Sales.
• Shows the annual growth of the Tony’s Pizza brand is stable.
• Is virtually flat from 2014 through 2017.
b. Figure 8-7B: Average Annual Sales per Household.
• Be careful to read the numbers on the vertical axis.
• Shows more households are buying pizzas.
• It’s just that each household is buying fewer Tony’s pizzas.
• The number of households buying pizza:
– Is growing, and that’s good news for Tony’s but…
– They’re just not buying Tony’s Pizza as much—a source of concern.
c. Figure 8-7C: Average Annual Sales per Household, by Household Size.
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• Shows the source of the problem:
– Average annual sales to households with 1-2 people are stable but…
d. Figure 8-7D: Average Annual Sales per Household, by Age of Children in the
Household.
• The picture now has become clear.
• The problem that emerges is the serious decline in the average pizza
consumption in households with younger children, particularly those
6 to 12-years old.
e. Identifying a sales problem in households with children 6 to 12-years old is an
important discovery, as Tony’s sales are declining in a market segment that is
known to be one of the heaviest in buying pizzas.
VI. STEP 5: TAKE MARKETING ACTIONS
• Effective marketing research doesn’t stop with findings and recommendations.
• Marketers must:
a. Identify the marketing actions.
b. Put them into effect.
c. Monitor how the decisions turn out.
A. Make Action Recommendations
• Marketers must convert market research findings into specific marketing
recommendations.
• Recommendations must focus on clear marketing objectives to be achieved.
• For Tony’s Pizza, the objective is to:
a. Target households with children ages 6 to 12 to…
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• For Tony’s Pizza, the recommendations are to:
a. Develop an advertising program that targets children 6 to 12 years old.
B. Implement the Action Recommendations
To implement these action recommendations, Tony’s Pizza should:
• Undertake advertising research to develop ads that appeal to children in the 6-to-
12 age group and their families.
• Give the research results to an advertising agency, which develops several sample
ads.
C. Evaluate the Results
There are two aspects of the evaluation process:
• Evaluating the decision itself. This involves monitoring the marketplace to
determine if action is necessary in the future.
a. Are sales increasing from the 6-to-12 age group as a result of the ad
campaign?
b. Should more ads be run to stimulate further sales?
• Evaluating the decision process used.
a. Was the marketing research and analysis used to develop the
recommendations effective?
b. Was it flawed? If so, could it be improved for similar situations in the future?
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LEARNING REVIEW
8-9. In the marketing research for Tony’s Pizza, what is an example of (a) a finding
and (b) a marketing action?
8-10. In evaluating marketing actions, what are the two dimensions on which they
should be evaluated?
VII. SALES FORECASTING TECHNIQUES [LO 8-6]
• Forecasting potential sales is often a key goal in a marketing research study.
• Good sales forecasts are important for a firm as it schedules production.
• A sales forecast:
a. Is the total sales of a product that a firm expects to sell during a specified time
period under specified environmental conditions and its own marketing efforts.
b. Assumes consumers’ preferences remain constant and competitors don’t change
prices.
A. Judgments of the Decision Maker
• Most sales forecasts are judgments of an individual decision maker.
• A direct forecast involves estimating the value to be forecast without any
intervening steps.
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• A lost-horse forecast involves:
a. Starting with the last known value of the item being forecast, such as actual
sales for 2017.
B. Surveys of Knowledgeable Groups
To estimate what a firm’s sales will be next year, ask people who are likely to know
something about future sales. Two common approaches are:
• A survey of buyers’ intentions forecast.
a. Involves asking prospective customers if they are likely to buy the product
during some future time period.
b. Can be effective for industrial products with few prospective buyers.
• A salesforce survey forecast.
C. Statistical Methods
• The best-known statistical method of forecasting is trend extrapolation:
a. Involves extending a pattern observed in past data into the future.
b. Assumes that the underlying relationships in the past will continue into the
future.
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• [Figure 8-8] Linear trend extrapolation.
a. Is when the pattern is described with a straight line.
b. You draw a line to fit the past data and project it into the future to give the
forecast values.
LEARNING REVIEW
8-11. What are the three kinds of sales forecasting techniques?
8-12. How do you make a lost-horse forecast?
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APPLYING MARKETING KNOWLEDGE
1. Suppose your dean of admissions is considering surveying high school seniors about
their perceptions of your school to design better informational brochures for them.
What are the advantages and disadvantages of doing (a) telephone interviews and
(b) an Internet survey of seniors who have requested information about the school?
a. Telephone interview.
1. Advantages.
• Virtually everyone in the senior high school class has a land line/mobile
telephone.
• A representative sample of high school seniors may be obtained.
• The telephone interview permits answers to be probed easily to obtain extra
information from respondents.
2. Disadvantages.
• The difficulty of getting students to respond to telephone questions and to
respond to scaled questions they can hear but not see in writing.
• Including students in the sample who have no interest in the school.
• Moderately expensive, assuming a reasonable completion rate.
• Some interviewers can bias the results due to the inflection of their voices when
asking questions.
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• Many potential qualified respondents have unlisted telephone numbers and/or
placed themselves on the federal government’s Do Not Call registry. This
eliminates them from the universe of qualified respondents, thereby introducing
b. Internet surveys.
1. Advantages.
• The sampled respondents have shown their interest in the university so the
response rate should be high.
• Usually the least expensive method, assuming adequate completion rates. It is
2. Disadvantages.
• Getting new ideas from seniors not requesting information.
• Little flexibility to probe responses or ask complex questions since the self-
administered online form must be short and simple to complete.
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2. Wisk detergent decides to run a test market to see the effect of coupons and in-store
advertising on sales. The index of sales is as follows:
What are your conclusions and recommendations?
3. Nielsen Media Research obtains ratings of local TV stations in small markets by
having households fill out diary questionnaires. These give information on (a) who is
watching TV and (b) the program being watched. What are the limitations of this
questionnaire method?
4. The format in which information is presented is often vital. (a) If you were a harried
marketing manager and queried your information system, would you rather see the
results in tables or charts and graphs? (b) What are one or two strengths and
weaknesses of each format?
Answers: Delivering the results in “pictures” (charts and graphs) and on a single page if
possible helps the marketing manager to see results more quickly.
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5. (a) Why might a marketing researcher prefer to use secondary data rather than
primary data in a study? (b) Why might the reverse be true?
Answers: Secondary data are facts and figures that have already been recorded before the
project at hand. Primary data are facts and figures that are newly collected for the project.
6. Look back at Figure 8-4. Which questions would you pair to form a cross tabulation
to uncover the following relationships? (a) Frequency of fast-food restaurant
patronage and restaurant characteristics important to the customer, (b) Age of the
head of household and source of information used about fast-food restaurants,
(c) Frequency of patronage of Wendy’s and source of information used about fast-
food restaurants, or (d) How much children have to say about where the family eats
and number of children in the household.
